Britain’s advertising sector shared in the economic misery of 2020, but could be set to bounce back forcibly in 2021.
While some might have raised an eyebrow at a recent report forecasting advertising spend will grow enough to exceed 2019 levels, such optimism appears far from starry-eyed, as it has the backing of a leading economist from the Bank of England.
Published at the end of last month, the Advertising Association/WARC Expenditure Report forecasted that the sector will see a dramatic revival in 2021 as the economy recovers and the country opens up. Having estimated that spending on advertising fell by 7.9 per cent in 2020, the market has been anticipated to enjoy growth of 15.2 per cent.
It offered an extremely optimistic prognosis; not only will the decline of 2020 be cancelled out, but the total value of ad spend will reach £26.69 billion, eclipsing the previous high of £25.37 billion in 2019. If this turns out to be accurate, every voice over company should soon have a bulging order book.
Commenting on the report, Advertising Association chief executive Stephen Woodward remarked: “Not only does the data show the overall decline expected in 2020 may be less than feared, but the recovery in 2021 will be stronger than we would have dared hope even a few months ago.”
The question is, can such an upbeat outlook be justified? For the answer to be yes, it will require not just for Britain’s successful vaccination programme to help the country open up, but for the economy to rebound strongly in a way that would justify advertisers spending heavily in anticipation of reaping the benefits from pent-up demand for various goods, services and experiences.
It is one thing for an industry insider to support bold predictions; another for such optimism to be backed by some of the country’s top economists.
Andy Haldane, the chief economist at the Bank of England, has predicted that the economy is close to turning “a decisive corner with enormous amounts of pent-up financial energy waiting to be released, like a coiled spring”.
Writing in the Daily Mail this week, Mr Haldane, who sits on the Bank’s rate-setting Monetary Policy Committee, explained that the pent-up desire of Britons to do ‘normal’ things again, such as eating out, going to the cinema and watching sport, will be a critical factor.
Although many have lost their jobs, Mr Haldane noted that for millions of people income has remained the same but spending opportunities have been limited. This means they have extra savings that they can spend. This factor would make this recovery different from those in the past, he suggested.
Moreover, he argued, people will be keen to make up for lost time by having more fun than before the pandemic, meaning extra pub trips and nights out.
Such a surge in consumer spending would mean companies being extremely keen to get a piece of the action after a year of struggle. This being the case, there is every logical reason to believe that marketing and advertising will be very busy in 2021.
After so much gloom, the optimists may have called it right.